H-L charging structure

planteria

Rollinghome wrote: »

The most interesting comment in that article is "Gorham said another benefit of unbundled charging would be that Hargreaves Lansdown’s ‘Wealth 150’ list would no longer be criticised for allowing fund managers to buy their way on with bigger kickbacks to the platform."

Which is a tacit admission of the obvious: that their "Wealth 150" list is currently a list that funds pay to be advertised on.

that's not how i read it. i think he is suggesting that they have been falsely accused, and now no longer will be.

planteria

jimjames wrote: »

You hit the nail on the head with the 6 figure portfolio quote. Most people don't have that much so funds work out cheaper and far easier. Maybe it works for the UK but I certainly wouldn't feel confident choosing and buying shares in the Far East.

agreed. i have individual FTSE100 shares with specialist funds alongside, all with HL as it happens.

planteria

i have read this thread with interest.

i have SHPs with Wesleyan, NFU Mutual and Teachers Assurance, and some cash savings, but other than that my investments are with HL: ISA Fund, SIPP and a Fund & Share account.

HL service is good. i think their information is clear & concise. i think the Investment Times is worth a read through, accepting that the basic task is to make my own decisions and to look more deeply into fund holdings, and whether to infact buy some company shares directly.

on one hand we all want the right deal. so we either a. want HL to come up with a competitive charging structure as a result of RDR or b. to move our investments elsewhere.

on the other hand, should we just relax in the knowledge that HL will have to be fairly competitive going forwards or they would risk losing significant business? i had a meeting with a local building society a few months ago who wanted to charge me initial fees for funds i can buy via HL with full refund...clearly anyone buying via a platform is on the right broad track.

also, to put it in context, a relative of mine was unsure where to put his ISA allowance two/three years ago and, being sceptical, was concerned about how much money HL were bagging from him holding his investments with them. so, while he wondered what shares to invest in that tax year, he put the full allowance into HL's own shares. they doubled. he sold. and now he considers that HL shares have covered his dealing costs and all fees for years to come........so just a thought, but perhaps we ought to focus on making enough pounds that the pennies don't matter too much:A

dunstonh

i had a meeting with a local building society a few months ago who wanted to charge me initial fees for funds i can buy via HL with full refund...clearly anyone buying via a platform is on the right broad track.

As much as buying through a building society is a bad idea, it is a different service. HL is non-advice. The B/S would be advice. Also, HL do not give full refunds on commission. They keep all the platform commission and around half or more of the trail commission.

Rollinghome

WaltD wrote: »

There is no spread on OEICs. Only on Unit Trusts.

Although that's often said on this board it's not strictly true. There are quite a number of OIECs using dual pricing with a spread between the bid/offer prices and conversely many UTs that are single priced.

Look at Old Mutual OEICs for example, such as this one with a net spread of about 1.5% after rebate of 4% initial charge: http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/o/old-mutual-uk-smaller-cos-accumulation

So would agree with your suggestion for consolidating funds to avoid transfer charges, especially with smaller holdings - but mind the gap.

bigadaj

dunstonh wrote: »

As much as buying through a building society is a bad idea, it is a different service. HL is non-advice. The B/S would be advice. Also, HL do not give full refunds on commission. They keep all the platform commission and around half or more of the trail commission.

Yes, but the quality of advice you'd be getting from the bs could easily be worse than useless, in which the only value would be a laborious claim for poor advice down the line rather than anything of value.

I think you are also slightly nit picking in regard to hl costs, we know they are not the cheapest but you can do a lot worse as noted here. You can rightfully claim to get lower costs through specialist platforms but as a consumer the overall net costs are what is important and the ifa fees need to be included in that which means its only economic for very large sums apart from where the investor needs advice.

There was a poster on here yesterday who's mother was using chase de vere for what were apparently modest sums, and had no idea of fees being charged or seemingly investment risk being taken, but was happy as the money coming out seemed ok, whether by investment returns or potential erosion of capital.

dunstonh

I think you are also slightly nit picking in regard to hl costs, we know they are not the cheapest but you can do a lot worse as noted here. You can rightfully claim to get lower costs through specialist platforms but as a consumer the overall net costs are what is important and the ifa fees need to be included in that which means its only economic for very large sums apart from where the investor needs advice.

An IFA can be cheaper than HL now. IFAs dont get paid trail commission and if you dont want servicing then all you pay is the platform charge and fund charge. yes there will be an initial advice charge but on medium to larger amounts, that can be a cheaper option within a year or two. However, the IFA market and DIY market are different. HL keep most of the old adviser trail commission. Yet dont provide advice. So, that needs to be considered a charge. They are also getting a platform commission which is undisclosed (as is normal for bundled platforms). This is one of the reasons why the regulator are banning that model. For too long it has been seen as giving you some of the charges back back but now it is actually taking something off you. HL do a good job and provide a decent platform for the DIY market. However, their charges are not transparent and clear for 2013. The same can be said for all bundled platforms. The sooner they go unbundled the better it will be. Apart from those that use solely index trackers or direct investments on platforms that relied on cross subsidy from managed funds.

Rollinghome

planteria wrote: »

so just a thought, but perhaps we ought to focus on making enough pounds that the pennies don't matter too much:A

Unfortunately while you can be sure of charges you can't guarantee returns. For anyone with sizeable investments then the charges currently made by HL amount to rather more than pennies unfortunately.

By moving elsewhere they could typically reduce what they pay HL in platform fees and commission by around 60%. That could amount to a saving of hundreds of pound each year especially as some platforms additionally offer classes of funds with lower charges than do HL.

So by all means pay more for a slicker service and snazzier website if that's important to you but do be aware of what it's costing you. Ian Gorham has already made clear that HL would not be able to reduce their charges to the levels of the most competitive and still remain profitable.

planteria

dunstonh wrote: »

As much as buying through a building society is a bad idea, it is a different service. HL is non-advice. The B/S would be advice. Also, HL do not give full refunds on commission. They keep all the platform commission and around half or more of the trail commission.

yes, i mean the initial fee. 5.25% fee via WBBS. 5.25%-5.25% fee via HL. and others, i appreciate.

planteria

dunstonh wrote: »

..........HL do a good job and provide a decent platform for the DIY market. However, their charges are not transparent and clear for 2013. The same can be said for all bundled platforms. The sooner they go unbundled the better it will be. Apart from those that use solely index trackers or direct investments on platforms that relied on cross subsidy from managed funds.

i tend to agree. the question for me, and many others, is whether there is really a better option than using HL for Shares and Managed Funds. i havent invested my SIPP and ISA lumps yet this tax year...and i tend to think that HL will have no choice but to be competitive in the new environment, which, like you, i welcome.